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The UK’s biggest cigarette supplier has stepped up attempts to find new backers amid a looming deadline to ­repay tens of millions of pounds to some of the world’s biggest tobacco manufacturers.

Palmer & Harvey, one of the UK’s largest private companies with around 4,000 employees, is understood to need around £50m of fresh funds by the end of September.

It has launched a formal search for new outside investors, led by advisers at PwC, triggering speculation that Sainsbury’s and the Co-op could make a move in response to a series of big deals in the grocery industry.

However, sources close to the talks suggested bidders were being put off by the size of the company’s debt pile, and the amount...